Before I plunge into today’s daily, I have a short video for you to watch that will show you in no uncertain terms why we are all screwed! Even the most optimistic of you, who have refused to accept the inevitable, should be brought back to reality after watching this video. Please do pass it on to all of your friends and relatives. Now you know why you must divest of dollars and move to precious metals:
The Total Animated, Annotated US Debt – ZeroHedge.com
Submitted by Tyler Durden on 12/06/2012 14:50 -0500
With debt ceilings being summarily dismissed and billions and trillions of dollars being thrown around like confetti, we have become almost entirely de-sensitized to the colossal size of the numbers involved (and to be frank de minimus impact from any ‘compromise’. In order to comprehend the size of the US Debt load, Demonocracy created this video visualized in physical $100 bills. And you thought a Jumbo-Jet full of cash was a lot…
Gold closed back right on $1,700 and silver moved above $33. These are important short-term support levels. Let’s see how the week ends today.
Yesterday, I came across a great chart that shows the Dow priced in gold. It’s important because for over a decade now, it takes more and more ounces of gold to buy stock in our finest and largest companies. No, gold isn’t going up, the amount of dollars it takes to buy the gold is increasing – i.e. the dollar is falling, it’s losing its buying power. It now takes less than 7.5 ounces of gold “to buy the Dow,” but it took 44.8 ounces of gold to buy the Dow in 1999. Using this metric, the dollar is worth just one-sixth of what it was in 1999. That’s a loss of 85% and that is real, if you stayed in the Dow instead of switching to gold at the turn of the century. This trend is 12-years old and still in place. Looking at the chart, it is entirely possible that the ratio will fall to one-to-one, which is where it was in 1980 and where I have suggested for the last 10-years that it will be again. I don’t know what the number will be, ($3000 gold, 3000 Dow or $5,000 gold, 5,000 Dow or $10,000 gold, and 10,000 Dow) but I am confident about the RATIO.
In the late 1970s, when people were leaving the dollar for a “safe haven,” the two places that money flowed were into gold and the Swiss franc. The Swiss, in an effort to slow the demand for their franc imposed “negative” interest rates on deposits.
Physical gold is a hedge against big government. With negative interest rates, the CHF is not a viable alternative.
Yes, that’s right, you had to PAY interest to keep money in a savings account in Swiss banks. That’s what is happening now, 45 years later. On Monday, Credit Suisse announced that they would start to charge clients for holding CHF cash balances. This makes gold more desirable to the big money depositors that have their wealth tied up in the CHF. There is no question that a fair share of those funds will find their way into gold.
“Currency wars” (a race to competitive balance via devaluation) has morphed into capital control wars.
This afternoon, Joel Kravitz (who runs our office during the winter in Del Ray Beach) drove down to Aventura to have lunch with me. We were joined by two of his clients, who made a special trip here just to meet with me personally. One of the ladies actually lives near my home in Deephaven, MN and the other, who used to live in Minneapolis, now lives in Ecuador. Both of them immigrated to Minneapolis from Russia and became friends. They love my newsletter and always read at least my comments and the mail box section. I was very happy to see how much they have absorbed by reading the newsletter. They really do understand what is happening.
I asked one of them, “Am I what you expected me to be?”
She smiled and replied, “Yes, exactly!” Well, that is as it should be. With me, what you see is what you get. I don’t put on an act or pretenses. I speak my mind, usually with a passion, and am as honest and forthright as I know how to be – both in print and in life.
I estimate that I publish around 6,000 pages a year and most of what I write could probably be well summed up in a few pages. If you pay attention to what I write, you should be focusing on the primary trend and the big picture (two terms oft used by Richard Russell). Most of the day-to-day commentary is about short-term events and market moves, but really, if you are accumulating “ounces” of gold and silver for the long-haul, the short-term stuff is nothing more than market “noise.”
Ignore the “noise.” Pay attention to the following — It is mathematically impossible to save the dollar. No amount of taxation or budget cuts will make a difference. I showed you this chart yesterday, but take another look at it. As you can see, all of the B.S. about raising taxes on the rich and the fiscal cliff is ridiculous!
The dollar will be the ultimate victim and as it loses value, year-after-year due to the government’s trillion dollar-plus borrowing and printing, everything you buy from food to energy to health care to clothing will cost more and I mean a lot more. People on fixed incomes will be squeezed or worse. People whose wealth is all in dollars will be decimated. Really, it is going to happen. It’s happening now. I’ve showed you the charts, the vertical growth of the Fed’s balance sheet, i.e. the money supply.
It’s a fact of life in 2013 America. With the Democrats in full control, more and more people will receive “welfare,” and Social Security – but they will soon find out that they won’t be able to live off of the payments. They won’t even begin to keep up with the rising costs of their food, medicine, housing and energy. That’s when the masses will let envy and anger surface and those who have wealth will become the target, and it won’t only be their taxes. The dollar will be replaced as the world’s reserve currency, not way off in the future but most likely between 2016-2020 and that’s when gold will finally peak. The bull market has several more strong years ahead of it.
If you own gold, silver, platinum, palladium or any high quality physical asset (real estate, diamonds, high quality art work or collectables, etc.) you have sheltered your wealth. I happen to prefer gold and silver because they are liquid. The condo we purchased 18 months ago in Aventura is a fine investment although that’s not why we purchased it. Mostly by coincidence, we bought it at the bottom of the real estate market and it has since turned up strongly here in South Florida. It’s a magnificent property and it’s just a few blocks off the ocean, but we are 28 floors up with a view that is simply breathtaking. Beachfront property (or property with a “view”) will always hold its value (unless global warming causes the ocean to rise 10’ – 20’ and it all ends up under water. That could happen, but not in my lifetime. So, it will continue to go up in price. There are so many ultra-wealthy Russians and Brazilians looking to live in this area that all quality properties sell quickly. The unit next to ours went up for sale in August and the seller received seven offers in the first week of his listing, all for more than we paid for our unit, which happens to be quite a bit nicer. But he had to wait over four months to consummate the sale. I can turn my gold and silver into cash in a few days.